2022 oil blocks auction: four companies submit final documents

– Natural Resources Minister assures licences to be issued in 2025

Over a year after Guyana’s first auction of its oil blocks, it has been confirmed by the Ministry of Natural Resources that four of the companies who took part in the auction, have made final submission of critical documents required to move the process forward – with the Ministry aiming to issue exploration licences sometime during this year.

During the Ministry of Natural Resources end-of -year press conference, Permanent Secretary Joslyn McKenzie provided an update on the 2022 oil block auction.
McKenzie revealed that at least four companies have made final submission of documents needed to move the process forward.
“On the auction very quickly, indeed the companies that have indicated acceptance of the PSA, they’ve been asked to make the final submission of some of the documents, including financial statements,” he explained.
“And also, a number of other legal and regulatory documents in keeping with the PAA of 2023. Those submissions have been made for four of the companies. And we’re in the final stages of that review,” McKenzie added.
The Permanent Secretary noted that since they are dealing with a number of consortiums, reviews have to be done for every one of the companies involved.
However, he assured that there are no challenges with the companies, relative to their submissions.
Meanwhile, Natural Resources Minister Vickram Bharrat acknowledged the time it has taken to resolve the auction.
However, he noted why this time was necessary, since the Government is honing the terms for the model Production Sharing Agreement (PSA) for future agreements.
“I want to personally apologise, because I agree with you. We should have concluded at least some of the agreements with regards to the bid round. It has taken a long time. But what we wanted, I think Vice President did mention it. We wanted a PSA that applies to all the bidders,” the Minister said.
“We could have concluded this process and done a PSA for Exxon, one for Total, one for the International Group, we could have concluded long before if we had done that. But that wasn’t what we wanted. We wanted to have a PSA that was accepted by all the bidders and a PSA that any future bidders would have to work with. And I think that is what took the time.”
Meanwhile, in response to questions from this publication, Minister Bharrat did confirm, following the press conference, that exploration licences for these companies will be issued no later than 2025.
It had been revealed last year that four of the six successful bidders in the auction have already accepted the terms of the agreement. According to a list released by the Ministry of Natural Resources, Total Energies EP Guyana BV, in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia) – which bid for block S4 – have already accepted the PSA.
It had also been announced that Delcorp Inc. Guyana, comprising Watad Energy and Communications Limited, and Arabian Drilling Company of Saudi Arabia, which bid for block D1; and Ghana-based Cybele Energy Limited, which bid for block S7, had also accepted their PSA, which is in the final stages of review.
International Group Investment Inc of Nigeria, which bid for blocks S5 and S10, had also accepted the PSAs for both blocks, and according to the Natural Resources Ministry, they were being processed.
However, the Ministry of Natural Resources and the Environment (MNRE) had explained that Stabroek Block partners, ExxonMobil Guyana Ltd, Hess Guyana Lt & CNOOC, which bid for block S8, were reviewing the PSA. The MNRE had also said it was awaiting a response from local women-led company Sispro Inc, which bid for blocks D2 and S3.
The 2016 oil contract for the Stabroek Block, signed between the ExxonMobil-led co-venturers and the-then APNU/AFC Coalition Government for production in the oil-rich Stabroek Block, had been heavily criticised for low royalty, lack of ring-fencing provisions, and cost oil claims that saw Guyana losing billions, among other issues.
The People’s Progressive Party/Civic (PPP/C) Administration in 2023 introduced a series of stringent terms and conditions for new oil deals that the country would sign.
These include increase of the royalty from a mere two per cent to now a 10 per cent fixed rate; the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent from the previous 75 per cent, while maintaining the retention of the 50-50 profit-sharing after cost recovery.